Goldman-Backed Chinese Fast-Fashion Label La Chapelle Launches $702 Million IPO

La Chapelle, a Chinese fast-fashion label that is known as "China's Zara," launched an initial public offering (IPO) on September 13 with the aim of raising about 4.6 billion yuan (702 million) to fund an expansion of its offline retail network and develop new information technology. The Shanghai-based womenswear label, founded by Xing Jiaxing in 1998 (and incorporated in 2001 as Shanghai La Chapelle Fashion Co.) received approval for the public offering from the country's stock regulator in June and is listed on the Shanghai Stock Exchange. This comes just three years after it completed an IPO in Hong Kong. La Chapelle is often called China's Zara because of its focus on selling fast fashion to female urban consumers. The brand has gained strong momentum over the past several years, attracting investment from top investors such as Goldman Sachs and Legend Capital. In 2013, Goldman Sachs poured 300 million yuan (45.7 million) into the company in exchange for a five-percent stake. Back in 2009, Legend Capital acquired a 25-percent stake for 45 million yuan (6.9 million). According to the company's latest IPO prospectus, which was released on the official website of the Shanghai Stock Exchange on September 12, the proceeds of the IPO will mainly be used to build 3,000 more offline retail stores in the next three years. As for its revenue, for the six months ending on June 30, 2017, the company, which has roughly 40,000 employees, according to Bloomberg, reported revenue of 4,281,863,000 yuan (653,387,000) compared with 4,005,986,000 yuan (611,290,000) a year ago. Though the online e-commerce marketplace has increasingly become an authoritative space for shopping in China, La Chapelle puts strong emphasis on the offline retailing sector. The prospectus indicates that the brand's major retail channel is the country's department stores. By the end of June 2017, it owned 9,066 stores. "Expanding the retail network is in line with the company's long-term strategy," said Yu Qiang, the brand's Chief Finance Officer (CFO), in an interview with a Chinese site. "It will accelerate the product distribution and strengthen the online-to-offline connection, and ultimately improve the brand image." While it may seem counterintuitive for a local fashion brand to be focusing on its offline infrastructure when many international brands are putting so much money and energy toward venturing into the e-commerce space in China, La Chapelle's strategy reveals how some veteran domestic retailers envision the future of the country's retailing landscape: a seamless interchange between online and offline activity. China's top e-commerce company, Alibaba, shares the same vision. The "New Retail" business model that it has been promoting concentrates on creating new shopping experiences and directing online shoppers back to the offline shopping malls through new technology. To aid the development of that process, Alibaba plans to open its first offline shopping mall named "More Mall" in Hangzhou next April. Chinese consumers can still purchase La Chapelle's products online. The brand has had a shop on Tmall since 2014 and acquired a domestic e-commerce company in 2015 to improve its online operations.

Goldman-Backed Chinese Fast-Fashion Label La Chapelle Launches $702 Million IPO

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Published September 15, 2017

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Goldman-Backed Chinese Fast-Fashion Label La Chapelle Launches $702 Million IPO